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Foundation ownership and shareholder value: an event study

Author

Listed:
  • Ann-Kristin Achleitner

    (TU Munich
    CEFS)

  • Dmitry Bazhutov

    (University of Wuppertal)

  • André Betzer

    (University of Wuppertal)

  • Joern Block

    (Trier University
    Erasmus University Rotterdam)

  • Florian Hosseini

    (Trier University)

Abstract

Some of the largest listed firms in Western and Northern Europe are partly owned by foundations. So far, little research exists about the shareholder value effects of foundation ownership. This study aims to close this gap using an event study method. We find that equity markets show a positive reaction following the announcement by a foundation that it intends to decrease its ownership share, whereas we find no reaction when a foundation announces that it intends to increase its ownership share. The positive reaction to an announcement of an ownership share decrease is particularly strong when a foundation holds an equity stake of less than 25%. Further investigations show that our findings are specific for foundations as blockholders and do not occur with other blockholders. Overall, our study shows that equity markets are skeptical about foundations as shareholders. Future research is needed to determine whether this skepticism is due to monitoring problems of foundations, goal divergences between foundations and firms, foundations being hybrid organizations with multiple goals, or legal restrictions that come with this particular form of firm ownership.

Suggested Citation

  • Ann-Kristin Achleitner & Dmitry Bazhutov & André Betzer & Joern Block & Florian Hosseini, 2020. "Foundation ownership and shareholder value: an event study," Review of Managerial Science, Springer, vol. 14(3), pages 459-484, June.
    • Handle: RePEc:spr:rvmgts:v:14:y:2020:i:3:d:10.1007_s11846-018-0296-x
    DOI: 10.1007/s11846-018-0296-x
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    More about this item

    Keywords

    Blockholders; Event study; Foundation-owned firms; Shareholder value; Foundations;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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